Take a look at what software a business uses on a daily basis. Each comes with its own set of advantages and disadvantages, its own goods and bads. Software as a Service is not immune to those pros and cons. SaaS has not avoided the need to change, which is why there is a race to provide SaaS technologies that are as beneficial to the customer as they are to the seller. As SaaS evolves and interacts with the business world, there is room for both worlds to come together.

Taking SaaS Beyond Web 2.0

Businesses have long been using Software as a Service for streamlining payroll, accounting and communications. But these pre-packaged solutions do not offer unique experiences for businesses. Traditionally, if a feature does not meet the needs of a business, a work around is created, often surfacing as a new piece of software. The end result is a small business needing several different pieces of software that are rapidly out of date, expensive to maintain and have a steep learning curve.  

In addition, implementing a CRM tool or other software that is traditionally labeled SaaS generally requires the implementation of several other solutions in order to maximize its effectiveness. With the purchase of Employease comes the need for an email client. With the purchase of Salesforce.com comes the need for increased marketing functionality. With the purchase of Microsoft CRM comes the need for licensing of Microsoft Office for the entire user base. The cost of purchasing, updating or customizing these extraneous pieces of software can quickly take a toll on a company's budget. Factor in the additional time an employee must spend learning how to create a symbiotic relationship between all of these solutions and the cost soon outweighs the benefits.

In today's world of on-demand Web Applications, the speed and pricing have improved, but the options for customized solutions that are tailored to the needs of each unique business are ostensibly absent. While a company may spend $75 per user per month to access an online service such as Salesforce.com, chances are it is also spending huge amounts of capital to keep Microsoft Office updated, standardizing an email client and having network and system administrators maintaining the complimentary software that most SaaS solutions still require.

SaaS is coming into the public eye because of the Web 2.0 movement. Complete user experiences, dynamic content and new niche technologies are helping to draw users further into a Web site than ever before. Gone are the days of the static brochure sites. Simple development tools are allowing small businesses to create and implement Web solutions that rival big-budget companies. The potential for SaaS is limited by a few existing factors, such as speed of deployment, flexibility of integration and adaptability to new technology, however.

When a business integrates a solution under the guise of "Software as a Service", other tools soon surface in order to maximize its effectiveness. If SaaS were available on-demand, however, those features could easily be rolled together and at a much less significant cost.

By providing a SaaS model that makes it easy for businesses to implement and integrate software, businesses are given unlimited flexibility and customizability. The marketplace method of providing Software as a Service is efficient, cost effective and the logical direction for the progression of deploying business software.  

The Salesforce.com effect
Salesforce.com is a popular customer relationship management tool employed by small businesses and large corporations alike (AMD, AOL and Nokia are amongst their notable clients). It provides a Web-based environment for sales people and appointment setters to interact with client data to provide an easy method for setting appointments, tracking sales data and managing tasks. Companies using Salesforce.com pay a per-user, per-month fee and generally are obligated to long-term contracts. Getting started with salesforce.com is an intimidating process. No pricing is given on their Web site, but reports list their base cost at $60 per user, per month and can escalate rapidly as users add features.

Launched live in January 2006, AppExchange is operated by SalesForce.com and is a way for developers to produce and sell plug-ins for the core CRM tool that is SalesForce.com. AppExchange has been off to a thunderous start, thanks to SalesForce.com's legion of users. This also exposes a weakness in the main model. Businesses want an increased means to customize and expand their CRM or ecommerce tools. AppExchange is a place for users of SalesForce.com to browse through the options available. They can obtain an AppExchange plug-in to compliment their existing tool.

AppExchange Applications are pricey, with the service draining $25 per user, per month from a business. Also, the start-up costs for most of the Apps are well out of the reach of many small businesses, with some reaching up to $20,000 annually for a simple marketing tool.

From a developer's perspective, the creativity is somewhat limited. All applications must be built with SalesForce.com in mind. The apps are built without much input from customers, which can lead to disconnect between the customer and the developer. Their definition of "point-and-click customization" is very different than that of the common user. With AppExchange, the ability to choose what features are included is easy, but suiting them to fit in with a company's public Web site is difficult.

Other companies have adopted the shared-hosting method of providing CRM tools that Salesforce.com began. Siebel, SugarCRM and others are all staking their claim in the world of SaaS. But they all come with serious flaws.

Engaging a flexible SaaS distribution
There has traditionally been a disconnect between SaaS and "shrink-wrapped" business software. Traditional software generally requires extensive customization to even be functional. What SaaS has been missing is a collaborative effort to maximize its effectiveness. By creating an ecosystem of developers, end user clients and hosting companies, Etelos is nurturing the growth of SaaS to its full potential.

One of the hurdles proprietary applications must clear is the affront of usability. Sure it can be customized, but by whom? Often times, building an application requires the use of expensive Web developers and IT professionals or outsourcing the work. But by creating a world of on-demand updates, providing the ability to alter the functionality of the application from its dashboard and giving an application's administrator the ability to edit the company's public Web site or even the ability to synchronize numerous applications across an account, Etelos is revolutionizing SaaS distribution and consumption.

The Etelos distribution method allows for on-demand installation of an application. A business can be up and running with an Etelos Marketplace Application within minutes. A traditional argument is that SaaS applications should include a multi-tenant architecture. Multi-tenant means that the database model is built to support several different entities on the same database, although those entities can never see each other's data. This is a flawed premise. By allowing clients full access to the database and their hosting environment, true scalability is achieved. The ability to mold an application to fit the exact needs is what is revolutionary, not providing a cookie-cutter solution.

The rise of SaaS

According to a 2005 article in CFO Magazine, worldwide spending on SaaS exceeded $4 billion in 2004 and is expected to grow to $10.7 billion by 2009. Under the traditional model of distributing SaaS solutions, a customer licenses the software for use, pays an up-front fee and ongoing yearly maintenance costs that typically run to 15 percent or more of the initial licensing fee. Some SaaS solutions also require an organization to purchase hardware and incur other capital expenditures in order to maximize their effectiveness. These upfront costs limit the abilities of a small, one- or two-person retail shop to employ these beneficial solutions.

The benefits of adopting this model are lucrative. According to the Computer Business Review Online, analyst IDC estimates that 76 percent of the growth in the CRM market between now and 2008 will come from the on-demand market and that vendor revenues in this sector will grow from $700 million to $3.6 billion over the same period. This represents approximately one third of the total SaaS market. The proportion of budgets spent on SaaS rises at the expense of on-premise software. In addition, the number of companies able to run SaaS will increase due to the lower price points, creating a recurring revenue model for the SaaS providers and hosting companies alike.

The Etelos Platform, however, truly does keep costs low. The end result of a platform that features a rapid-deployment development environment; shared, but separate, hosting services; and application subscriptions instead of purchases; is lower cost to the business. What traditionally costs tens of thousands of dollars is now only a few hundred. Maintenance and updates are inexpensive, if not free. Because of Etelos hosting and distribution models, there is no need to purchase expensive hardware or invest in a team of consultants to shape the direction of the software.

The Etelos Platform for providing Software as a Service is not a burgeoning technology. It has been refined over and over again and is now set to be the standard for SaaS and on-demand software. Etelos gives users flexibility and allows them the freedom to make the most out of their applications while keeping costs reasonable enough that small businesses can compete with larger operations.